Standard Chartered (2888): Model Update

We update our forecasts to reflect the 3Q26 results, increasing EPS by 4% in FY26, with limited changes thereafter. We now expect revenue growth of 8% in FY26, reducing to 6% FY27E given a strong base alongside a CIR of 58% in 2027E, and operating leverage to further drive the CIR lower to 57% 2028E. We are also raising our risk-free rate assumption from 3.5% to 4.0% in our DDM model. As a result, we are lowering our PT from HK$310 to HK$290. We remain OW on the stock. We believe the Group is on track to achieve an 18% ROTE by 2030. We view StanChart as offering strong EPS growth potential (JPMe +20% CAGR 25-28E) at attractive valuations of ~9x PE 2028E compared to international peers, supported by structural growth drivers and balance sheet growth, with ROTE reaching 16.2% in 2028. Key downside risks include EM macroeconomic and geopolitical risks, higher-than-expected provisions, and UK regulatory uncertainty.